Correlation Between AP Moeller and MPC Container

Can any of the company-specific risk be diversified away by investing in both AP Moeller and MPC Container at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AP Moeller and MPC Container into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AP Moeller Maersk AS and MPC Container Ships, you can compare the effects of market volatilities on AP Moeller and MPC Container and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AP Moeller with a short position of MPC Container. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Moeller and MPC Container.

Diversification Opportunities for AP Moeller and MPC Container

-0.24

Correlation Coefficient

AP Moeller  MPC Container

Very good diversification

The 3 months correlation between AMKBY and MPC is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and MPC Container Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPC Container Ships and AP Moeller is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AP Moeller Maersk AS are associated (or correlated) with MPC Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPC Container Ships has no effect on the direction of AP Moeller i.e., AP Moeller and MPC Container go up and down completely randomly.

Pair Corralation between AP Moeller and MPC Container

Assuming the 90 days horizon AP Moeller is expected to generate 30.31 times less return on investment than MPC Container. But when comparing it to its historical volatility, AP Moeller Maersk AS is 6.71 times less risky than MPC Container. It trades about 0.02 of its potential returns per unit of risk. MPC Container Ships is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  86.00  in MPC Container Ships on September 24, 2024 and sell it today you would earn a total of  92.00  from holding MPC Container Ships or generate 106.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

AP Moeller Maersk AS  vs.  MPC Container Ships

AP Moeller Maersk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AP Moeller Maersk AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, AP Moeller is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MPC Container Ships

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MPC Container Ships has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with AP Moeller and MPC Container

The main advantage of trading using opposite AP Moeller and MPC Container positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Moeller position performs unexpectedly, MPC Container can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MPC Container will offset losses from the drop in MPC Container's long position.

The idea behind AP Moeller Maersk AS and MPC Container Ships pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.